Government Mandates TReDS Settlement for CPSEs to Speed Up MSME Payments
The Ministry of MSME has mandated that Central Public Sector Enterprises (CPSEs) use TReDS for settling payments to MSME suppliers to improve transparency and speed up cash flow.Summary
The Ministry of MSME has made TReDS the mandatory settlement route for all operational Central Public Sector Enterprises (CPSEs) when paying MSME suppliers for goods and services. The new rule, issued via a notification on June 30, requires CPSEs to route MSME invoice settlements through RBI-authorised TReDS platforms. While the use of TReDS remains optional for MSME suppliers, who are not required to discount or finance their receivables, the notification applies to any other authority or entity notified by the Central Government, which must also disclose invoice details in the format prescribed by the RBI. Compliance is further enforced through an audit requirement, where CPSEs must obtain certification from their statutory auditors confirming registration on at least one TReDS platform. This mandate aims to address the long-standing issue of delayed payments among MSMEs by making payment cycles more predictable and financing more efficient. The policy is expected to improve transparency and accountability in MSME procurement, setting a benchmark for other corporate buyers and encouraging wider adoption of digital invoice settlement across the private sector.
(Source：Sme Venture)